Federal Stafford Loans
Your college or university participates in one of two programs that provide Federal Stafford Loans. The main difference between the two programs is how the loan is funded. Your school will tell you which program it participates in and how to apply for a Federal Stafford Loan.
Your school may participate in either the:
- Federal Family Education Loan Program (FFELP) — where banks, credit unions and savings banks fund the loans.
- William D. Ford Federal Direct Loan Program (Direct Loan) — where the U.S. Department of Education provides the money for the loan through the college or university.
Loan Types
Two types of Federal Stafford Loans are available: subsidized and unsubsidized.
Subsidized Federal Stafford Loans
Subsidized Federal Stafford Loans are based on financial need. The federal government will pay the accrued interest on your loan during the time you are a student and up to six months after you graduate, withdraw from school or drop to less than half-time enrollment.
Unsubsidized Federal Stafford Loans
Unsubsidized Federal Stafford Loans are not based on financial need. You will be responsible for paying the interest that accrues while you are attending college. You will, however, have the option to either pay the interest while you are in school or to defer your interest payments and add it to the principal amount of your loan.
When you defer interest payments, interest will accrue and will be added to your loan; therefore, deferring payments for an extended period of time may substantially increase your loan balance. You should make payments that at least cover your accrued interest to avoid increases in your loan balance.
Loan Facts
A few Federal Stafford Loan facts:
- You must complete the Free Application for Federal Student Aid (FAFSA).*
- The interest rate is fixed at 6.80%.**
- Repayment begins six months after you graduate, leave school or drop to less than half time.
- You may be eligible for borrower benefits.
*The FAFSA is a free form that may be completed without professional assistance via paper or electronic forms provided by the U.S. Department of Education at www.fafsa.ed.gov.
**For undergraduate Subsidized Federal Stafford Loans with disbursements made on or after July 1, 2008, and before July 1, 2009, the interest rate will be fixed at 6.00% for the life of the loan.
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Loan Limits
The Ensuring Continued Access to Student Loans Act of 2008, signed into law on May 7, 2008, increases Federal Stafford Loan annual and aggregate limits for loans disbursed on or after July 1, 2008, for undergraduate students.
Maximum Annual Loan Limits for Stafford Loans
Disbursed On or After July 1, 2008 |
| Year |
Dependent
Undergraduate |
Independent
Undergraduate** |
Graduate
Student |
| First Year |
$5,500
(maximum $3,500 in subsidized Stafford Loans) |
$9,500
(maximum $3,500 in subsidized Stafford Loans) |
$20,500
(maximum $8,500 in subsidized Stafford Loans) |
| Second Year |
$6,500
(maximum $4,500 in subsidized Stafford Loans) |
$10,500
(maximum $4,500 in subsidized Stafford Loans) |
| Third – Fifth Year |
$7,500
(maximum $5,500 in subsidized Stafford Loans) |
$12,500
(maximum $5,500 in subsidized Stafford Loans) |
Aggregate Stafford
Loan Limit |
$31,000
(maximum $23,000 in subsidized Stafford Loans) |
$57,500
(maximum $23,000 in subsidized Stafford Loans) |
$138,500
(maximum $65,500 in subsidized Stafford Loans) |
**If you're a dependent student whose parents applied for, but were not approved for, a Federal PLUS Loan (parent loan), you can borrow at the independent undergraduate level.
You can receive both subsidized and unsubsidized loans, as long as the amount you borrow does not exceed the annual loan limits.
When you graduate with a graduate or professional degree, the maximum total debt allowed from Stafford Loans is $138,500. This maximum total graduate debt limit includes Stafford Loans received for undergraduate study.
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Take advantage of borrower benefits and save money on your Federal Stafford Loan.
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